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    Home/FAR Navigator/22/22.1/22.1022

    FAR Navigator

    • 1Federal Acquisition Regulations System
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    • 18Emergency Acquisitions
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    • 22Application of Labor Laws to Government Acquisitions
      • 22.000Scope of part.
      • 22.001Definitions.
      • 22.1Subpart 22.1
        • 22.101Labor relations.
        • 22.102Federal and State labor requirements.
        • 22.103Overtime.
        • 22.1000Scope of subpart.
        • 22.1001Definitions.
        • 22.1002Statutory and Executive order requirements.
        • 22.1003Applicability.
        • 22.1004Department of Labor responsibilities and regulations.
        • 22.1005[Reserved]
        • 22.1006Solicitation provisions and contract clauses.
        • 22.1007Requirement to obtain wage determinations.
        • 22.1008Procedures for obtaining wage determinations.
        • 22.1009Place of performance unknown.
        • 22.1010Notification to interested parties under collective bargaining agreements.
        • 22.1011[Reserved]
        • 22.1012Applicability of revisions to wage determinations.
        • 22.1013Review of wage determination.
        • 22.1014Delay over 60 days in bid opening or commencement of work.
        • 22.1015Discovery of errors by the Department of Labor.
        • 22.1016Statement of equivalent rates for Federal hires.
        • 22.1017[Reserved]
        • 22.1018Notification to contractors and employees.
        • 22.1019Additional classes of service employees.
        • 22.1020Seniority lists.
        • 22.1021Request for hearing.
        • 22.1022Withholding of contract payments.
        • 22.1023Termination for default.
        • 22.1024Cooperation with the Department of Labor.
        • 22.1025Ineligibility of violators.
        • 22.1026Disputes concerning labor standards.
        • 22.1101Applicability.
        • 22.1102Definition.
        • 22.1103Policy, procedures, and solicitation provision.
        • 22.1300Scope of subpart.
        • 22.1301Definitions.
        • 22.1302Policy.
        • 22.1303Applicability.
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        • 22.1305Waivers.
        • 22.1306Department of Labor notices and reports.
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        • 22.1308Complaint procedures.
        • 22.1309Actions because of noncompliance.
        • 22.1310Solicitation provision and contract clauses.
        • 22.1400Scope of subpart.
        • 22.1401Policy.
        • 22.1402Applicability.
        • 22.1403Waivers.
        • 22.1404Department of Labor notices.
        • 22.1405Collective bargaining agreements.
        • 22.1406Complaint procedures.
        • 22.1407Actions because of noncompliance.
        • 22.1408Contract clause.
        • 22.1500Scope.
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        • 22.1502Policy.
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        • 22.1504Violations and remedies.
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        • 22.1600Scope of subpart.
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        • 22.1605Contract clause.
        • 22.1700Scope of subpart.
        • 22.1701Applicability.
        • 22.1702Definitions.
        • 22.1703Policy.
        • 22.1704Violations and remedies.
        • 22.1705Solicitation provision and contract clause.
        • 22.1800Scope.
        • 22.1801Definitions.
        • 22.1802Policy.
        • 22.1803Contract clause.
        • 22.1900Scope of subpart.
        • 22.1901Definitions.
        • 22.1902Policy.
        • 22.1903Applicability.
        • 22.1904Annual Executive Order Minimum Wage Rate.
        • 22.1905Enforcement of Executive Order Minimum Wage Requirements.
        • 22.1906Contract clause.
      • 22.2Subpart 22.2
      • 22.3Subpart 22.3
      • 22.4Subpart 22.4
      • 22.5Subpart 22.5
      • 22.6Subpart 22.6
      • 22.8Subpart 22.8
      • 22.9Subpart 22.9
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    • 48Value Engineering
    • 49Termination of Contracts
    • 50Extraordinary Contractual Actions and the Safety Act
    • 51Use of Government Sources by Contractors
    • 52Solicitation Provisions and Contract Clauses
    • 53Forms
    Up to 22.1
    SectionUpdated April 16, 2026

    FAR 22.1022—Withholding of contract payments.

    Plain-English Summary

    FAR 22.1022 explains how the Government protects workers and recovers money when a contractor violates the Service Contract Labor Standards clause at FAR 52.222-41. It covers the contractor’s liability for deductions, rebates, refunds, and underpayments, including complete nonpayment of required compensation, and it authorizes the contracting officer to withhold contract payments to cover those amounts. It also allows withholding not only from the affected contract but from other prime contracts with the same contractor, whether or not those other contracts are themselves subject to Service Contract Labor Standards. The section further explains that withheld money must be placed in a deposit fund, then transferred to the Department of Labor for payment to underpaid employees under the direction of the Secretary of Labor, an authorized representative, an Administrative Law Judge, or the Administrative Review Board. Finally, it notes DOL’s blanket approval to forward withheld funds while an investigation or administrative proceeding is still pending when that is the last step needed to close out the contract. In practice, this section is a key enforcement and worker-remedy mechanism that helps ensure wage compliance and gives agencies a clear process for securing funds before they disappear.

    Key Rules

    Violations create liability

    If the contractor violates FAR 52.222-41, the contractor is liable for any deductions, rebates, refunds, or underpayments owed to employees. The rule expressly includes nonpayment of required compensation, so a failure to pay wages at all is treated as an underpayment.

    CO may withhold payments

    The contracting officer may withhold the amount needed to satisfy the wage deficiency from accrued payments due the contractor on the contract. This gives the agency a direct remedy to secure funds for worker back pay.

    DOL can require withholding

    Upon written request from the Department of Labor at a sufficiently senior level, the contracting officer must withhold the needed amount. This makes withholding mandatory when DOL formally directs it.

    Cross-contract withholding allowed

    The Government may withhold from other prime contracts with the same contractor, even if those contracts are not subject to the Service Contract Labor Standards statute. This broadens the pool of funds available to cover employee underpayments.

    Withheld funds go to a deposit fund

    The agency must place withheld amounts into a deposit fund rather than treating them as ordinary contract funds. This preserves the money pending final disposition.

    DOL controls disbursement

    The withheld funds are transferred to the Department of Labor for payment to underpaid employees, and disbursement occurs only on order of the Secretary of Labor or authorized decision-makers such as an Administrative Law Judge or the Administrative Review Board.

    Pending-investigation forwarding approved

    DOL has given blanket approval to forward withheld funds before the investigation or administrative proceeding is fully complete when that is the final action needed to close out the contract. This avoids unnecessary delay in resolving the contract.

    Responsibilities

    Contractor

    Comply with FAR 52.222-41 and ensure employees receive all required compensation. If violations occur, the contractor is financially liable for deductions, rebates, refunds, and underpayments, including nonpayment.

    Contracting Officer

    Determine whether withholding is appropriate, withhold accrued payments when authorized, and apply withholding from the affected contract or other prime contracts as permitted. The contracting officer must also ensure withheld amounts are placed in a deposit fund and processed for transfer as required.

    Department of Labor

    Request withholding in writing when necessary, direct the disposition of withheld funds, and oversee payment of back wages to affected employees through the appropriate adjudicative or administrative process.

    Agency

    Place withheld funds in a deposit fund and transfer them to the Department of Labor for disbursement. The agency must maintain the funds separately and follow the required payment and closeout procedures.

    Secretary of Labor, ALJ, or ARB

    Authorize or order the disbursement of withheld funds to underpaid employees after the relevant findings or proceedings support payment.

    Practical Implications

    1

    This section gives the Government a strong collection tool, so wage violations can affect cash flow quickly and across multiple contracts.

    2

    Contractors should treat payroll compliance as a contract administration issue, not just a labor-law issue, because violations can trigger withholding from current invoices and other prime contracts.

    3

    Contracting officers need to coordinate closely with DOL and finance offices to ensure withholding is timely, properly documented, and deposited correctly.

    4

    A common pitfall is assuming only the affected contract is at risk; this section allows withholding from other prime contracts with the same contractor.

    5

    Another practical issue is closeout timing: DOL’s blanket approval to forward funds can speed resolution, but only when the withheld amount is the last remaining action needed to close the contract.

    Official Regulatory Text

    Any violations of the clause at 52.222-41 , Service Contract Labor Standards, as amended, renders the responsible contractor liable for the amount of any deductions, rebates, refunds, or underpayments (which includes nonpayment) of compensation due employees performing the contract. The contracting officer may withhold-or, upon written request of the Department of Labor from a level no lower than that of Deputy Regional Administrator, Wage and Hour Division, Department of Labor, shall withhold-the amount needed to pay such underpaid employees from accrued payments due the contractor on the contract, or on any other prime contract (whether subject to the Service Contract Labor Standards statute or not) with the contractor. The agency shall place the amount withheld in a deposit fund. Such withheld funds shall be transferred to the Department of Labor for disbursement to the underpaid employees on order of the Secretary (or authorized representatives), and Administrative Law Judge, or the Administrative Review Board. In addition, the Department of Labor has given blanket approval to forward withheld funds pending completion of an investigation or other administrative proceeding when disposition of withheld funds remains the final action necessary to close out a contract.

    Back to 22.1FAR Navigator
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